Prime Central London property sales over GBP1m rise to 40 per cent of all transactions

Fund data for this article

The number of property sales over GBP1 million in Prime Central London (PCL) has increased to 40 per cent of all transactions, rising from just 25 per cent in 2008, according to asset manager London Central Portfolio (LCP).

On the basis of these statistics, there could now be 80,000 property millionaires in the pocket sized area of the City of Westminster and the Royal Borough of Kensington and Chelsea, which makes up PCL.

With prices increasing on average by eight per cent per annum from GBP917,695 in 2008 to GBP1,608,625 by the end of last year, available properties at the lower end of the price spectrum are inevitably diminishing.

LCP’s analysis shows that four zones, made up of 11 postcode sectors situated in the outer edges of PCL, still post average prices under the GBP1m mark, starting within the government’s Help-to-Buy criteria of GBP600,000.

These zones are unified by what, historically, has been a downside – the ‘commuter’ effect. The main pockets centre around Paddington Station, The Westway which links to the M40, Victoria Station and around Earls Court Exhibition Centre and the Cromwell Road linking to the M4. However, Naomi Heaton, chief executive of LCP, says that gentrification is inevitable.

“Historically, prices have been held back in these areas. This is due to the array of run-down commuter hotels and small ‘stop-over’ pied-a-terres around major trunk roads and train stations which connect London to the rest of the UK. Not to mention the swathes of people passing through these transport hubs daily. However, the flip-side of this is that the existing infrastructure and amenities, coupled with pockets of attractive (albeit decaying) architecture make them particularly exciting in terms of future growth potential. We are already seeing them catch-up as development turns the run-down hotels into new des-res.”

One zone which may be particularly attractive to potential buyers is the Westminster/Pimlico area which touches the Thames. This still records below average prices, despite its riverside location. Within this zone is SW1V 3, the cheapest postcode sector in PCL at GBP593,600, and neighbouring SW1V 4, located close to the Pimlico Grid still slips under the GBP1m price point.

Similarly, the more run down zone around Bayswater (W2 1), Notting Hill (W2 6) and Marylebone Station (NW1 6), straddling the Westway, should also pique investors interest, with its very convenient transport links and potential for gentrification. Prices range between GBP631,151 and GBP862,150.

LCP has also examined price growth in each of the 52 postcode sectors since the 2008 pre-credit crunch high, identifying areas showing the strongest market recovery. As a whole, 14 postcode sectors experienced growth above 10 per cent. The top 10 all grew more than 12 per cent a year.

For those with money to play with, the SW1X (7,8,9) area of Knightsbridge which encompasses Sloane Street, Cadogan Place and world-renowned Harrods still demonstrates the highest average annual growth of 16.7 per cent with a current average price of GBP4.5m.

Mayfair’s W1 (J,K,S) around Hyde Park Corner and Park Lane is not far behind, with growth levels of 16.1 per cent and an average price of GBP2.8m.

One pocket of isolated high growth has also emerged around Regents Park in the NW8 6, 7 & 8 area of St John’s Wood, where prices average GBP1.5m. This traditionally more domestic area has flourished recently as UK economic confidence and housing sentiment has picked up, representing a more residential area, close to good transport links.

For those on the hunt for the best deals, the other areas which are both more affordable and illustrate the strongest price appreciation are all east of Hyde Park swinging up from Pimlico area to Soho, Fitzrovia and Marylebone. Interestingly, these again show how gentrification converges around good architecture surrounding the main transport hubs, with the Jubilee Line, the Heathrow Express, and the soon-to-be Cross Rail, key drivers for growth.

Heaton says: “The centre of gravity in PCL is undoubtedly moving towards Mayfair, Marylebone, Fitzrovia and Pimlico, all closer to the City and the main transport links, but with plenty of architectural heritage. The smart investor will look towards the historically less traditional areas in PCL for the future investment hot-spots. Indeed, whilst the mandate for our fourth Central London Property Fund will remain the same; to acquire a portfolio of one and two bedroomed properties in all the prime postcodes surrounding Hyde Park, focusing our attention on these areas east of The Park will allow us to build a more diversified portfolio with the highest potential returns for our investors. We are targeting 100 properties for the GBP100m total fund size.”